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Loans | 3 Months Ended
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Mar. 31, 2013
Loans [Abstract] |
Loans | Note 4 - Loans Major classifications of loans at March 31, 2013 and December 31, 2012 are as follows (in thousands):
|  | March 31, |  |  | December 31, |
|  | 2013 |  |  | 2012 |
Commercial and industrial |  | $ | 35,452 |  |  |  | 26,236 |
Commercial, secured by real estate |  |  | 283,144 |  |  |  | 230,256 |
Residential real estate |  |  | 214,282 |  |  |  | 183,132 |
Consumer |  |  | 13,860 |  |  |  | 10,554 |
Agricultural |  |  | 1,805 |  |  |  | 1,668 |
Other loans, including deposit overdrafts |  |  | 1,146 |  |  |  | 1,875 |
|  |  | 549,689 |  |  |  | 453,721 |
Deferred net origination (fees) costs |  |  | (22 | ) |  |  | 62 |
|  |  | 549,667 |  |  |  | 453,783 |
Less allowance for loan losses |  |  | 3,404 |  |  |  | 3,437 |
Loans, net |  | $ | 546,263 |  |  |  | 450,346 |
Non-accrual, past-due, and accruing restructured loans as of March 31, 2013 and December 31, 2012 are as follows (in thousands):
|  | March 31, |  |  | December 31, |
|  | 2013 |  |  | 2012 |
Non-accrual loans: |  |  |  |  |  |
Commercial and industrial |  | $ | 181 |  |  |  | 264 |
Commercial, secured by real estate |  |  | 1,414 |  |  |  | 788 |
Residential real estate |  |  | 1,578 |  |  |  | 1,231 |
Total non-accrual loans |  |  | 3,173 |  |  |  | 2,283 |
Past-due 90 days or more and still accruing |  |  | 180 |  |  |  | 128 |
Total non-accrual and past-due 90 days or more and still accruing |  |  | 3,353 |  |  |  | 2,411 |
Accruing restructured loans |  |  | 13,693 |  |  |  | 13,343 |
Total |  | $ | 17,046 |  |  |  | 15,754 |
Percentage of total non-accrual and past-due 90 days or more and still accruing to total loans |  |  | 0.61 | % |  |  | 0.53 | %
Percentage of total non-accrual, past-due 90 days or more and still accruing, and accruing restructured loans to total loans |  |  | 3.10 | % |  |  | 3.47 | %
Loans sold to and serviced for the Federal Home Loan Mortgage Corporation and other investors are not included in the accompanying consolidated balance sheets. The unpaid principal balances of those loans at March 31, 2013 and December 31, 2012 were $87,710,000 and $71,568,000, respectively. Loans sold during the three months ended March 31, 2013 and 2012 totaled $7,175,000 and $5,866,000, respectively. The allowance for loan losses and recorded investment in loans for the three months ended March 31 are as follows (in thousands):
|  | Commercial & Industrial |  |  | Commercial Real Estate |  |  | Residential Real Estate |  |  | Consumer |  |  | Agricultural |  |  | Other |  |  | Total |
2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year |  | $ | 320 |  |  |  | 2,296 |  |  |  | 712 |  |  |  | 108 |  |  |  | - |  |  |  | 1 |  |  |  | 3,437 |
Provision charged to expenses |  |  | 20 |  |  |  | 87 |  |  |  | 14 |  |  |  | 22 |  |  |  | - |  |  |  | 6 |  |  |  | 149 |
Losses charged off |  |  | (83 | ) |  |  | (30 | ) |  |  | (27 | ) |  |  | (63 | ) |  |  | - |  |  |  | (16 | ) |  |  | (219 | )
Recoveries |  |  | - |  |  |  | - |  |  |  | 5 |  |  |  | 23 |  |  |  | - |  |  |  | 9 |  |  |  | 37 |
Balance, end of period |  | $ | 257 |  |  |  | 2,353 |  |  |  | 704 |  |  |  | 90 |  |  |  | - |  |  |  | - |  |  |  | 3,404 |
Individually evaluated for impairment |  | $ | 71 |  |  |  | 657 |  |  |  | 157 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 885 |
Collectively evaluated for impairment |  |  | 186 |  |  |  | 1,696 |  |  |  | 547 |  |  |  | 90 |  |  |  | - |  |  |  | - |  |  |  | 2,519 |
Balance, end of period |  | $ | 257 |  |  |  | 2,353 |  |  |  | 704 |  |  |  | 90 |  |  |  | - |  |  |  | - |  |  |  | 3,404 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 181 |  |  |  | 14,006 |  |  |  | 1,294 |  |  |  | 7 |  |  |  | - |  |  |  | - |  |  |  | 15,488 |
Collectively evaluated for impairment |  |  | 35,234 |  |  |  | 268,838 |  |  |  | 213,190 |  |  |  | 13,966 |  |  |  | 1,805 |  |  |  | 1,146 |  |  |  | 534,179 |
Balance, end of period |  | $ | 35,415 |  |  |  | 282,844 |  |  |  | 214,484 |  |  |  | 13,973 |  |  |  | 1,805 |  |  |  | 1,146 |  |  |  | 549,667 |
2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year |  | $ | 162 |  |  |  | 1,941 |  |  |  | 656 |  |  |  | 166 |  |  |  | - |  |  |  | 6 |  |  |  | 2,931 |
Provision charged to expenses |  |  | 7 |  |  |  | 61 |  |  |  | 155 |  |  |  | (6 | ) |  |  | - |  |  |  | (2 | ) |  |  | 215 |
Losses charged off |  |  | - |  |  |  | (205 | ) |  |  | (117 | ) |  |  | (46 | ) |  |  | - |  |  |  | (20 | ) |  |  | (388 | )
Recoveries |  |  | - |  |  |  | 70 |  |  |  | 7 |  |  |  | 38 |  |  |  | - |  |  |  | 17 |  |  |  | 132 |
Balance, end of period |  | $ | 169 |  |  |  | 1,867 |  |  |  | 701 |  |  |  | 152 |  |  |  | - |  |  |  | 1 |  |  |  | 2,890 |
Individually evaluated for impairment |  | $ | - |  |  |  | 263 |  |  |  | 150 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 413 |
Collectively evaluated for impairment |  |  | 169 |  |  |  | 1,604 |  |  |  | 551 |  |  |  | 152 |  |  |  | - |  |  |  | 1 |  |  |  | 2,477 |
Balance, end of period |  | $ | 169 |  |  |  | 1,867 |  |  |  | 701 |  |  |  | 152 |  |  |  | - |  |  |  | 1 |  |  |  | 2,890 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 2,922 |  |  |  | 13,900 |  |  |  | 629 |  |  |  | 9 |  |  |  | - |  |  |  | - |  |  |  | 17,460 |
Collectively evaluated for impairment |  |  | 27,735 |  |  |  | 204,602 |  |  |  | 186,378 |  |  |  | 13,375 |  |  |  | 2,357 |  |  |  | 5,074 |  |  |  | 439,521 |
Balance, end of period |  | $ | 30,657 |  |  |  | 218,502 |  |  |  | 187,007 |  |  |  | 13,384 |  |  |  | 2,357 |  |  |  | 5,074 |  |  |  | 456,981 |
The Company uses a risk-rating system to quantify loan quality. A loan is assigned to a risk category based on relevant information about the ability of the borrower to service the debt including, but not limited to, current financial information, historical payment experience, credit documentation, public information, and current economic trends. The categories used are:
· | Pass – loans categorized in this category are higher quality loans that do not fit any of the other categories described below.
· | Other Assets Especially Mentioned (OAEM) - loans in this category are currently protected but are potentially weak. These loans constitute a risk but not to the point of justifying a classification of substandard. The credit risk may be relatively minor yet constitute an undue risk in light of the circumstances surrounding a specific asset.
· | Substandard – loans in this category are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the possibility that the Company will sustain some loss if the deficiencies are not corrected.
· | Doubtful – loans classified in this category have all the weaknesses inherent in loans classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
An analysis of the Company's loan portfolio by credit quality indicators at March 31, 2013 and December 31, 2012 is as follows (in thousands):
|  | Pass |  |  | OAEM |  |  | Substandard |  |  | Doubtful |  |  | Total |
March 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial |  | $ | 31,083 |  |  |  | 1,793 |  |  |  | 2,358 |  |  |  | 181 |  |  |  | 35,415 |
Commercial, secured by real estate |  |  | 262,682 |  |  |  | 1,797 |  |  |  | 18,365 |  |  |  | - |  |  |  | 282,844 |
Residential real estate |  |  | 206,546 |  |  |  | 2,322 |  |  |  | 5,616 |  |  |  | - |  |  |  | 214,484 |
Consumer |  |  | 13,931 |  |  |  | - |  |  |  | 42 |  |  |  | - |  |  |  | 13,973 |
Agricultural |  |  | 1,771 |  |  |  | - |  |  |  | 34 |  |  |  | - |  |  |  | 1,805 |
Other |  |  | 1,146 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,146 |
Total |  | $ | 517,159 |  |  |  | 5,912 |  |  |  | 26,415 |  |  |  | 181 |  |  |  | 549,667 |
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial |  | $ | 22,965 |  |  |  | 1,804 |  |  |  | 1,177 |  |  |  | 264 |  |  |  | 26,210 |
Commercial, secured by real estate |  |  | 218,246 |  |  |  | 2,653 |  |  |  | 9,022 |  |  |  | 107 |  |  |  | 230,028 |
Residential real estate |  |  | 172,589 |  |  |  | 2,353 |  |  |  | 8,130 |  |  |  | 298 |  |  |  | 183,370 |
Consumer |  |  | 10,549 |  |  |  | - |  |  |  | 62 |  |  |  | 20 |  |  |  | 10,631 |
Agricultural |  |  | 1,665 |  |  |  | - |  |  |  | 3 |  |  |  | - |  |  |  | 1,668 |
Other |  |  | 1,876 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,876 |
Total |  | $ | 427,890 |  |  |  | 6,810 |  |  |  | 18,394 |  |  |  | 689 |  |  |  | 453,783 |
A loan portfolio aging analysis at March 31, 2013 and December 31, 2012 is as follows (in thousands):
|  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Greater Than 90 Days Past Due |  |  | Total Past Due |  |  | Current |  |  | Total Loans Receivable |  |  | Total Loans Greater Than 90 Days and Accruing |
March 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial |  | $ | - |  |  |  | - |  |  |  | 181 |  |  |  | 181 |  |  |  | 35,234 |  |  |  | 35,415 |  |  |  | - |
Commercial, secured by real estate |  |  | 378 |  |  |  | - |  |  |  | 1,301 |  |  |  | 1,679 |  |  |  | 281,165 |  |  |  | 282,844 |  |  |  | 127 |
Residential real estate |  |  | 945 |  |  |  | 223 |  |  |  | 1,376 |  |  |  | 2,544 |  |  |  | 211,940 |  |  |  | 214,484 |  |  |  | 49 |
Consumer |  |  | 60 |  |  |  | 11 |  |  |  | 4 |  |  |  | 75 |  |  |  | 13,898 |  |  |  | 13,973 |  |  |  | 4 |
Agricultural |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,805 |  |  |  | 1,805 |  |  |  | - |
Other |  |  | 63 |  |  |  | - |  |  |  | - |  |  |  | 63 |  |  |  | 1,083 |  |  |  | 1,146 |  |  |  | - |
Total |  | $ | 1,446 |  |  |  | 234 |  |  |  | 2,862 |  |  |  | 4,542 |  |  |  | 545,125 |  |  |  | 549,667 |  |  |  | 180 |
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial |  | $ | - |  |  |  | 1 |  |  |  | 264 |  |  |  | 265 |  |  |  | 25,945 |  |  |  | 26,210 |  |  |  | - |
Commercial, secured by real estate |  |  | 346 |  |  |  | 79 |  |  |  | 788 |  |  |  | 1,213 |  |  |  | 228,815 |  |  |  | 230,028 |  |  |  | - |
Residential real estate |  |  | 791 |  |  |  | 212 |  |  |  | 1,172 |  |  |  | 2,175 |  |  |  | 181,195 |  |  |  | 183,370 |  |  |  | 103 |
Consumer |  |  | 61 |  |  |  | 57 |  |  |  | 25 |  |  |  | 143 |  |  |  | 10,488 |  |  |  | 10,631 |  |  |  | 25 |
Agricultural |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,668 |  |  |  | 1,668 |  |  |  | - |
Other |  |  | 72 |  |  |  | - |  |  |  | - |  |  |  | 72 |  |  |  | 1,804 |  |  |  | 1,876 |  |  |  | - |
Total |  | $ | 1,270 |  |  |  | 349 |  |  |  | 2,249 |  |  |  | 3,868 |  |  |  | 449,915 |  |  |  | 453,783 |  |  |  | 128 |
Impaired loans at March 31, 2013 and December 31, 2012 are as follows (in thousands):
|  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
March 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial |  | $ | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 9,480 |  |  |  | 9,875 |  |  |  | - |  |  |  | 9,516 |  |  |  | 89 |
Residential real estate |  |  | 534 |  |  |  | 727 |  |  |  | - |  |  |  | 591 |  |  |  | 3 |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3 |  |  |  | - |
Total |  | $ | 10,014 |  |  |  | 10,602 |  |  |  | - |  |  |  | 10,110 |  |  |  | 92 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial |  | $ | 181 |  |  |  | 249 |  |  |  | 71 |  |  |  | 202 |  |  |  | - |
Commercial real estate |  |  | 4,526 |  |  |  | 4,654 |  |  |  | 657 |  |  |  | 4,548 |  |  |  | 32 |
Residential real estate |  |  | 760 |  |  |  | 786 |  |  |  | 157 |  |  |  | 764 |  |  |  | 3 |
Consumer |  |  | 7 |  |  |  | 7 |  |  |  | - |  |  |  | 7 |  |  |  | - |
Total |  | $ | 5,474 |  |  |  | 5,696 |  |  |  | 885 |  |  |  | 5,521 |  |  |  | 35 |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial |  | $ | 181 |  |  |  | 249 |  |  |  | 71 |  |  |  | 202 |  |  |  | - |
Commercial real estate |  |  | 14,006 |  |  |  | 14,529 |  |  |  | 657 |  |  |  | 14,064 |  |  |  | 121 |
Residential real estate |  |  | 1,294 |  |  |  | 1,513 |  |  |  | 157 |  |  |  | 1,355 |  |  |  | 6 |
Consumer |  |  | 7 |  |  |  | 7 |  |  |  | - |  |  |  | 10 |  |  |  | - |
Total |  | $ | 15,488 |  |  |  | 16,298 |  |  |  | 885 |  |  |  | 15,631 |  |  |  | 127 |
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial |  | $ | - |  |  |  | - |  |  |  | - |  |  |  | 975 |  |  |  | 43 |
Commercial real estate |  |  | 9,541 |  |  |  | 9,936 |  |  |  | - |  |  |  | 9,310 |  |  |  | 350 |
Residential real estate |  |  | 417 |  |  |  | 417 |  |  |  | - |  |  |  | 397 |  |  |  | 5 |
Consumer |  |  | 20 |  |  |  | 20 |  |  |  | - |  |  |  | 23 |  |  |  | 2 |
Total |  | $ | 9,978 |  |  |  | 10,373 |  |  |  | - |  |  |  | 10,705 |  |  |  | 400 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial |  | $ | 264 |  |  |  | 822 |  |  |  | 159 |  |  |  | 374 |  |  |  | - |
Commercial real estate |  |  | 4,258 |  |  |  | 4,360 |  |  |  | 660 |  |  |  | 4,765 |  |  |  | 171 |
Residential real estate |  |  | 658 |  |  |  | 853 |  |  |  | 85 |  |  |  | 707 |  |  |  | 2 |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4 |  |  |  | - |
Total |  | $ | 5,180 |  |  |  | 6,035 |  |  |  | 904 |  |  |  | 5,850 |  |  |  | 173 |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial |  | $ | 264 |  |  |  | 822 |  |  |  | 159 |  |  |  | 1,349 |  |  |  | 43 |
Commercial real estate |  |  | 13,799 |  |  |  | 14,296 |  |  |  | 660 |  |  |  | 14,075 |  |  |  | 521 |
Residential real estate |  |  | 1,075 |  |  |  | 1,270 |  |  |  | 85 |  |  |  | 1,104 |  |  |  | 7 |
Consumer |  |  | 20 |  |  |  | 20 |  |  |  | - |  |  |  | 27 |  |  |  | 2 |
Total |  | $ | 15,158 |  |  |  | 16,408 |  |  |  | 904 |  |  |  | 16,555 |  |  |  | 573 |
One residential real estate loan was modified and classified as a troubled debt restructuring in each of the three-month periods ended March 31, 2013 and 2012 with a balance of $80,000 and $30,000, respectively, at the date of modification. Each restructured loan is separately negotiated with the borrower and includes terms and conditions that reflect the borrower's ability to pay the debt as modified. Modifications may include interest only payments for a period of time, temporary or permanent reduction of the loan's interest rate, capitalization of delinquent interest, or extensions of the maturity date. LCNB is not committed to lend additional funds to borrowers whose loan terms were modified in a troubled debt restructuring. A restructured automobile loan with a balance of $13,000 was charged off during the first quarter 2013, which was within twelve months of the loan's modification date. There were no other troubled debt restructurings that subsequently defaulted within twelve months of the restructuring date for the three months ended March 31, 2013 and 2012.

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